Ogden tables were around way before PPOs came into existence. Since the 90s they have always been used as a reference for lump sum BI claims where the injury is likely to have a material medium-to-long term effect (i.e. where mortality and/or the time value of money come into play)
Even if a claim doesn't go to court, lawyers will use Ogden tables as a reference. They will obviously try to determine what a court would award as part of a negotiation. If an insurer offers materially below what a court would award, the claimant will just go to court.
One interesting aspect of Ogden discount rate changes is that they apply to claims that have not settled, even if the loss happened ages ago.
The last time I checked, insurers generally, but not always, preferred to settle lump sum. This is understandable as it's difficult to hedge/lay off longevity risk for impaired lives and, in any case, general insurers don't specialise in long tail risks. Some insurers prefer to settle PPO. Why? I don't know. Perhaps because other parts of their group sell long-tail business or hold long-tail assets? Reinsurers tend to dislike PPOs because of the way they interact badly with indexation clauses. They are very capital hungry. The UK reinsurance market also lacks a standard commutation clause (c.f. France). This feeds through to reinsurance rates and affects insurers' appetites accordingly.
Judges generally prefer PPOs, as they better match claimants' liabilities.
You'd think claimants would always prefer PPOs, but often they don't. Perhaps because they don't understand the time value of money and they like the idea of a mega-windfall.
Most PPO settlements also include a lump sum element (which may depend on the Ogden tables, but could just be for up-front costs like reengineering the claimaint's house to fit a wheelchair).
Hope that makes things a little clearer. Could have gone into lots more detail - the above is a bit simplistic, but hopefully gives you the gist.
Last edited by a moderator: Aug 7, 2013